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CBS' streaming services draw 5 million subscribers; network plans "Entertainment Tonight" offering

CBS' streaming services draw 5 million subscribers; network plans "Entertainment Tonight" offering
CBS Corp. Chief Executive Leslie Moonves, shown in 2013. (Monty Brinton / AP)

CBS Corp.’s two streaming services — CBS All Access and Showtime — have racked up a combined 5 million subscribers, showing promise for the TV broadcaster’s digital ambitions.

CBS Chief Executive Leslie Moonves touted the numbers Thursday and said the company has plans to expand its digital portfolio, which also includes a 24-hour CBS News livestream, by offering new free services supported by advertising.

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The company plans a CBS Sports service that should launch this month before the March Madness college basketball tournament. A celebrity-rich “Entertainment Tonight” digital product is being designed to launch this fall.

“There is a tremendous appetite in the marketplace for entertainment news,” Moonves said during a Thursday conference call to discuss CBS’ fourth-quarter earnings. "We believe we can build a significant audience by launching an ad-supported free service with full mobile and on-demand capabilities.”

CBS has pursued a different streaming strategy than other major media companies. Because CBS does not own a piece of the streaming platform Hulu, it has been testing so-called over-the-top variations and partnerships.

“Delivering these services over-the-top also allows us to attract the next generation of viewers with an average age that's approximately 20 years younger than those who watch broadcast or cable television,” Moonves said.

For example, the average age of a digital CBS News viewer is 38.

In addition to launching more services domestically, CBS plans to export its $5.99-a-month All Access streaming service to Canada. Later it will introduce the service in Australia, where the company recently purchased the Ten television network, and then in Europe. CBS also offers a $9.99-a-month commercial-free option.

Meanwhile, CBS board members have started to evaluate a potential merger with Viacom Inc. Both companies are controlled by the Sumner Redstone family, and Shari Redstone, vice chair of the two publicly traded companies, has signaled that she wants to bring CBS and Viacom back together.

During Thursday’s conference call, CBS executives declined to discuss the proposed consolidation.

Instead, the traditional broadcasting company touted its strong operating performance as a stand-alone entity.

CBS’ fourth-quarter earnings beat analyst expectations. For the quarter that ended Dec. 31, CBS reported 11% higher revenue to a record $3.9 billion. Much of the increase came from content licensing and distribution sales, which soared 33.4% to $1.19 billion for the quarter.

The company posted a net income loss of $41 million, or 10 cents a share, down from a net loss of $113 million or 27 cents, a year ago. Adjusted earnings were $1.20 a share. Analysts surveyed by FactSet had projected adjusted earnings of $1.14 a share on revenue of $3.71 billion.

The drop was due, in part, from a $129-million charge to prepare for changes to U.S. tax law. In addition, CBS purchased an annuity — which resulted in a one-time accounting charge of $352 million — to help cover the company’s considerable pension obligations.

CBS reported earnings after the market closed. In regular trading, the stock climbed 1.6% to $56.74. In after hours, the shares rose about 2%

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